Page 5 - CCFA Journal - Sixth Issue

加中金融 宏观经济 MacroEcon

Investment Activity is soft and falling 投资活动疲软

First, let’s look at the fixed asset investment in China, which is 现在我们再来看看中国固定资产投资，是 GDP 的主要领
one of the main leading indicators for investments’ impact on 先指标之一，占比 43%的 GDP。投资在 2018 年达到顶峰，
GDP. So it tells us a lot about that 43% bucket for the Chinese 此后一直呈下降趋势。中国投资减少的主要原因之一是
economy. Investment has peaked in 2018 and it's been on a 政府在 2017 年引入了去杠杆化。在政策开始后不久，信
downward trend since then. I'll get into some of the main 贷总额开始从 15%加速减到 10%- 11%的范围。然后在
reasons for that, one of the main reasons why investments are 2020 年由于新冠这一趋势逆转。中国决定像世界上大多
trailing off in China, total credit growth in the Chinese 数国家一样刺激经济，大幅增长信贷，到去年 10 月达到
economy is China’s deleveraging campaign. For those that
don't follow too closely, it was around 2017, when the party 了 13-14%。从那以后它就一直在迅速减少。但这从来没
effectively brought in the deleveraging campaign, which they 有真正对投资产生重大影响，因为信贷基本上就像投资
call the leveraging de-risking and other things, but it's basically 的生命线，特别是在中国这样的国家。去杠杆化和金融
a deleveraging campaign. You can see from the chart how, 稳定是中国的首要任务。在我看来 2020 年和 2021 年的投
shortly after (the start of the campaign), the total amount of 资可能会触底反弹，目前约为 10%。周四或周五公布的最
credit begins to accelerate from 15% to the 10%- 11% range. 新数据略有上升，约为 10.05%，代表在接下来的几个季
And then, in 2020, of course, that trend reversed because of 度里持续有效的投资。
COVID. The People's Bank of China (PBOC), the Ministry of
Finance State Council and everybody in between, decided that 投资下降的第二个原因是基础设施投入降低, 始于大约在
they would stimulate the economy like most of the rest of the 同一时间(如去杠杆化运动), 就在党代会后,可以看到基础
world. Thus you see this big uptick in credit growth, up to 设施的年度增长从 20%减到 3 - 4%范围。COVID 显然打乱
about 13-14% by October last year. And since then it's been 了基础建设的节奏，但现在随着对财政刺激逐步撤出，
decelerating quite rapidly. But this never really has a big impact 基础设施支出也在下降，中期会继续下降，但长期不会。
on investment, because credit is basically like the lifeline for 中国财政部和地方政府削减基础设施支出的原因有很多。
investment, especially in a country like China. So in my view, 就目前而言，主要原因是中国的基础设施实际上已经饱
this deleveraging policy is a long-term priority for the party 和。我经常在全国各地旅行，无论是在北京、上海、青
because there are some financial stability concerns in the 2017 岛、贵州和其他地方，你都可以看到令人瞩目的世界级
period, which continue to exist today, and it will continue till 基础设施。很多基础设施就像山东胶州湾大桥。基础设
tomorrow. I think that the slope in 2020 and 2021 is going to 施虽然很好，但实际上并没有被大量使用。我曾经在高
probably bottom out, where it's around 10% now. And the 峰时间走过了这座 41 公里的桥，能数出一路上有多少辆
latest data came out on Thursday or Friday, and it increased a 汽车和卡车。所以现在有很多基础设施，在可预见的未
little bit - around 10.05%. So that’s going to be something 来将很难产生回报。这就是他们限制基础设施支出的原
effectively continued in the investment over the next several 因。
quarters.

The second reason for falling investment is basically the
infrastructure, which began around the same time (as the
deleveraging campaign), just after the party congress, as you
can see in this downward sloping chart of the infrastructure,
where it went from a 20% annual growth to the 3-4% range,
and COVID obviously disrupted that, as you can see that very
clearly in the graph. But now, as the COVID stimulus is
withdrawn from the economy, we're coming back out to
where we were in pre-COVID, which is quite low. So
infrastructure spending is down, and I expect it's going to
remain down through the medium term, but not the long term.
And there's a variety of reasons why the Ministry of Finance in
PRC and local authorities are cutting infrastructure spending.
The main reason is that, for the time being, China is effectively
is saturated with its infrastructure -- I travelled around the
country quite frequently, and whether you're in Beijing,
Shanghai, Qingdao, Guizhou and other places, you can just see
remarkable world-class infrastructure. It's everywhere, and
much of the infrastructure like this bridge here, this is an image
of the Jiaozhou Bay Bridge in Shandong. Much of the
infrastructure, while it's great, it's actually not heavily used. I
have travelled over this 41km bridge during rush hour or what
should have been a rush hour, and I was able to count the
number of cars and trucks on that trip on two hands. So there's
just a lot of infrastructure right now and I think much of this
infrastructure is going to have a hard time producing returns
for the foreseeable future. And that's why they clamped down
on infrastructure spending.

CCFA JOURNAL OF FINANCE February 2022
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